Economic Crisis Hits Recyclable Waste Market

Cuts in oil prices and reduction of production of consumer goods at an international level drive into bankruptcy those companies that collect recyclable materials.

Prices on the paper and cardboard recyclable materials' market have crashed in the last two moths therefore blocking transactions and threatening the fragile recycling system of Romania.

The main causes are: a spectacular cut in oil prices, which boosts production of plastic out of this raw material, but the economic crisis as well, which significantly reduced acquisition of consumer goods and implicitly, of packaging. The rest of Europe faces the same crisis but the western recyclers pay little to none the waste they collect from companies or people.

Both small waste collectors and big recycling companies are affected by the phenomenon and some have already begun to drastically renegotiate contracts with the firms that provide with the waste. According to ROSAL owner, M.P. Silviu Prigoana, last year a tonne of cardboard could be sold with 240 lei , whereas in January the price dropped to 50 lei, without sales taking off.

Mountains of waste in stock

Collectors and recyclers are now trapped since nobody seems to need the tonnes of waste they keep in stock. The stocks of "Urban" sanitation firm in Bucharest, in district 6, already count 1.500 tonnes of cardboard and another 120 tonnes of plastic foil.

"We are trapped. We haven't sold one carton bale since December. The situation is serious because under these conditions, Romania won't be able to fulfil the EU's requirements" explains Alexandru Predoiu, marketing manager of "Urban". The company can no longer pay to receive waste from big supermarket chains in the capital, the latter having to choose either to give them for free or not. Marius Magdin, owner of recycling firm "Microdes Recycling" says that he is forced to renegotiate contracts and pay less on cardboard waste. "The big firms bought industrial machines on credit and they now face financial difficulties" he explained the lack of orders.

"Vrancart Adjud" and "Ecopaper' in Zarnesti, two big companies that produce packaging, have already announced that they will not be buying recyclable cardboard until February. According to an "Ecopaper" representative, the company lacks orders and its stocks are already extremely big.

Cheap oil kills second-hand plastic

Prices for recycled plastic dropped with 30-40%. This phenomenon, which led to a price drop in virgin plastic raw material ( plastic fabricated directly from oil ), was attributed to the oil price drops. Large consumers of plastics now prefer this version to the recycled materials, considering that the quality of the finite product is higher. "It all depends on the price on oil gallon. The drop, in my opinion, is rather artificial.

There are signals, coming from the European and Asian markets that by May-June, things will go back to normal." says Marius Marinoff, representative of Ivo Group Italy, recyclable materials trader. He indicates that most clients interested in plastics are automobile companies, who halted part of their production because of the crisis and thus , they no longer need as much raw material.